Audit: Program that employs blind people in government buildings not properly managed

"The public needs to be reassured that this administration is not wasting taxpayers' dollars." - Ed Rodgers

Mark Rothenhauser, 55, operates the snack bar at the state Capitol. He's been participating in the state's Business Enterprise Program for people who are blind and visually impaired for six years.Melissa Anders | MLive

LANSING, MI — The state did not properly manage a program that helps blind people run vending facilities in government buildings, according to an audit report that estimates the program improperly spent about a quarter million dollars.

A report released Tuesday by Michigan’s Auditor General found that the Michigan Commission for the Blind did not effectively monitor the finances, contracting and inventory for its Business Enterprise Program. The program offers licenses to blind and visually impaired people to operate vending machines, cafeterias, snack bars, carts and other food services in state and federal buildings, highway rest stops and visitor centers.

The audit generally covered Oct. 2008 through July 2011, when the program was still managed by the Michigan Commission for the Blind.

The Department of Licensing and Regulatory Affairs (LARA) realized there were several issues with the vending program and requested the audit.

Gov. Rick Snyder responded to broader issues surrounding the Commission for the Blind with an executive order that replaced the commission with the Bureau of Services for Blind Persons in October.

Ed Rodgers took over as director of the bureau last month with the mandate to make improvements.

“While there’s issues and problems we need to correct, the public needs to be reassured that this administration is not wasting taxpayers’ dollars and that we are running an effective and efficient program,” Rodgers said. “We’re doing what we’re supposed to be doing.”

The Business Enterprise Program had eight staff members and more than 80 licensees who operated about 400 sites throughout the state as of July 2011.

Operators give 10 percent of their profits to the commission to pay for expenses such as new equipment and retirement funds.

The audit estimates that the commission improperly spent $254,000 in operator fees from Oct. 2008 through July 2011 on miscellaneous program expenses that were not in accordance with state code.

The commission also did not effectively confirm operators’ monthly sales reports, meaning the state couldn’t make sure that it properly calculated and paid retirement contributions, pension payments and operator fees, the audit found. Even though the vendors are independent contractors, the program pays out such benefits.

That finding didn’t surprise Mark Rothenhauser, who operates the snack bar at the state Capitol. He sells pizza slices, popcorn, soda and other snacks from a small shop located on the ground level of the building.

“An operator can basically pull a number out of the air and report that as sales,” he said. “There’s not a mechanism in place to authenticate what the operator reports as sales is actually their sales. So if you go with that, you don’t know if they’re paying the correct set-aside fee.”

Rodgers said he set aside $150,000 to create a new data program for the entire bureau that will keep better track of vending sales and net income. It should be in place early next year.